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Executive Summary
Barbados is located in the Atlantic Ocean, East of the Caribbean Sea. Having been under the direct British power and control, the UK monarch is still the head of Barbados, but is now an independent state. Its closest neighbour states are St. Vincent and the Grenadines and St. Lucia, as well as Trinidad and Tobago. Barbados covers a total area of 430 sq km.
Bridgetown is the capital of Barbados. English is its official language. It has a high human development index rate. The political and judiciary system of Barbados is largely based upon the English system. Barbados has adopted a parliamentary democracy political model, the UK monarch is locally represented by a governor.

Main activity of Barbados has always been cultivation of sugarcane, but in the last few decades it has significantly diversified its economy, developing the manufacturing market segment and tourism. In addition, the government has introduced favourable business regulations, making Barbados become one of attractive centres for offshore business purposes. Also significant real estate market development and modernization took place in the last twenty years. Foreign investors are welcomed in Barbados. Main trading partners are the US, Canada, Caribbean Islands and the UK.

The Barbadian Dollar (BBD) is the national currency.

Geography
Barbados is generally a low-lying territory, Mount Hillaby is the highest point of the country, reaching approximately 335 metres above the sea level. The land is of non-volcanic origin, which is composed mostly by limestone-coral.

Barbados has a tropical climate, but frequent winds help keep the weather pleasantly mild. There are some zones with tropical forests, however, larger territories have sugarcane plantations and sloping pastures.  The country has beautiful beaches, which make it attractive to tourists from all over the world. Barbados is vulnerable to tropical storms and hurricanes during the rainy season of the year.

Map, Flag and Coat of Arm


Types of Company


Private Limited Liability Company
Any company which is not public is a private entity. It is not permitted to offer its shares to the general public. The minimum requirement for this company incorporation and management is one shareholder and one director, which may be a private person and a corporate entity. Different classes of shares are allowed, including shares of no par value, but excluding bearer shares.

Public Limited Liability Company
This company may offer its shares to the general public, and it must have at least three directors.

Company without Share Capital
At least three directors must be assigned for management of this type of company, which must conduct not-for-profit activities.

Mutual Insurance Company
This company must be directly or indirectly owned by its members, providing them insurance or re-insurance services.

External Company
It is incorporated or unincorporated corporate entity under the law of a foreign country. In order to conduct a business in Barbados, an external company should register in the jurisdiction, by submitting all the necessary documents and paying a registration fee.

International Business Company
This structure is generally chosen for conducting offshore business activities, usually outside the jurisdiction. A status of an International Business Company, accompanied by an appropriate business license is granted to corporate entities which satisfy the following criteria: a company must be incorporate or managed from Barbados, thus being considered a resident; registered external companies are evaluated as resident companies; no more than 10% of the company’s shares upon its liquidation must belong to members from the Caribbean Community countries; and no more than 10% of a company’s dividends may be payable to such individuals.

Offshore banks, exempt insurance companies and foreign sales corporations cannot obtain a status of an International Business Company in Barbados. An International Business Company takes advantage of a particularly favourable taxation regime and a number of other benefits.

Foreign Sale Corporation
This structure is created in order to give tax benefits to US holding companies. It generally takes form of a Limited Liability Company, and is allowed to conduct business with entities strictly outside the Caribbean Community area. Such a company must be incorporated in Barbados; foreign trade transactions must be its primary activity; it must be owned by residents outside the Caribbean Community.

Foreign Sales Corporation has been repealed in 2004.

General Partnership
Such a partnership need not be registered, and no written partnership agreement must be submitted to the authorities. All the partners are individually and jointly liable for all the partnership’s debts and obligations. General partnerships must file tax returns, which is the only filing requirement applicable to them.

Limited Partnership
A maximums of 20 partners can constitute a limited partnership, however this number is reduced to 10, in case a partnership conducts banking activities. A limited partnership must be registered, as if it is not done, it will be deemed to be a general partnership. There must be at least one general partner with unlimited liability and a minimum of one limited partner, the liability of which is limited up to the capital invested into the partnership.

Exempted Limited Partnership
These are limited partnerships that follow restrictions but at the same time a particular tax treatment as International Business Companies.

Societe with Restricted Liability
This structure is similar to a Limited Liability Company, but has been specifically designed for US residents, in order to allow them to claim individual tax treatment. The maximum of such a company’s duration is limited to 50 years, its members have a limited liability, it has a legal personality in Barbados and its shares, which are correctly called as quotas, are under certain restriction of transferability. These companies can be both exempted and non exempted, they are not obliged to have a physical presence within the jurisdiction, but they must have a local registered agent and a local registered office at all times.

Trust
Trust law of Barbados is largely based on English law. A trust need not be registered in the jurisdictions and no stamp duties are applied. At least one trustee must be resident in Barbados. In case a local trustee is a corporate body, it must be registered and licensed. Local trusts are under exchange controls. The maximum perpetuity of a local trust is 100 years. Such trusts are taxed as separate bodies, following domestic taxation regime.

nternational Trust
Asset protection trusts and purpose trusts have been introduced. An International Trust is exempted from exchange controls and has significant tax advantages. In order to benefit from such a favourable regime and be considered an International Trust, a settlor must be non-resident of Barbados at the moment of creation of a trust, as well as trust property must not be held in Barbados.

Taxation
A tax year coincides with a calendar year, starting on 1st January and ending on 31st December of each year.

Personal
An individual is considered to be resident in Barbados if he spends at least 182 days within the country. A non-resident is taxed only on income gained in Barbados.

Individuals are not liable to pay capital gains tax, also estate, gift and inheritance taxes do not exist. VAT is levied at a rate of 15%. The main tax applied to individuals is income tax. In addition, employers and employees are liable to pay national insurance contributions. Stamp duty is payable in certain situations.

Corporate
Resident companies are liable to corporation tax, the standard rate of which has been significantly reduced since 2003 up to today.  Significant amendments in a taxation regime have been introduced in the Budget of 2007. Since then, companies, including International Business Companies, which earn dividends from holding non-resident companies are exempted from tax, in case the company is not only an investment company and it owns at least 10% of a foreign company’s shares. Withholding taxes are not payable on dividends paid by Barbados companies to non-resident entities. Companies that work in manufacturing, construction or tourism industries, obtain significant facilitations in case they obtain an internationally recognized environmental certificate. Withholding tax is levied at different rates on different occasions. Stamp duty is payable on certain transactions. Land tax is levied.
 
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